PROJECT SUMMARY Bone grafting procedures number over 500,000 annually in the United States, with allograft tissues used for 33% of the bone grafting operations. Although bone allografts from cadavers and donors have been utilized extensively to repair bone defects, bone allografts have not achieved the similar level of efficacy as compared with bone autografts. Furthermore, bone allografts for treatment of critical-sized bone defects show extremely slow engraftment and ? 60% long-term failure rates due to fibrotic nonunions, poor vascularization, poor osteointegration, infections, and microcrack propagation. To improve the healing and integration, strategies have been developed to modify bone allografts to enhance their osteogenic and angiogenic properties. These strategies include coating with polymers with and without incorporation of different drugs, coating with adeno-associated virus ? bone morphogenetic protein 2 (AAV-BMP2) vectors, coating with hydrogels containing bone marrow stem cells (BMSCs), wrapping with BMSCs-seeded nanofiber membranes. However, these strategies are associated with many problems including i) fibrosis tissue formation, ii) involvement of living cells, iii) uneven callus formation, and iv) safety of virus vectors. Therefore, there is an urgent need to engineer off-the-shelf bone allografts to improve their efficacy and performance in repair of the critical-sized bone defects. The primary objective of this study is to engineer bone allografts with a novel coating capable of releasing anti-fibrotic agents and bone growth regulating factors in either simultaneous or sequential fashion to improve the healing and osteointegration. To test the hypothesis and accomplish the primary objective, our strategy includes: i) Establish a method of engineering bone allograft with incorporation of BMP-2 peptides and a TGF-? signaling inhibitor to the coatings; and ii) Assess the anti-fibrotic efficacy, new bone formation, and osseointegration of engineered bone allografts in a murine femoral defect model; and 3) Examine the antagonism between TGF-? and BMP-2 signaling during bone allograft repair. We expect to identify the role of anti-fibrotic agents and bone growth regulatory factors on the healing of a critical bone defect through surface engineered bone allografts. The proposed strategy could also be useful in various applications aimed at promoting tissue regeneration.